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May 06, 2009

There was an excellent Op-Ed piece in the Washington Post this morning by Kristen Sheeran and Mindy Lubber that puts the reverse spin on economist Robert Samuelson's piece there on April 27th was itself a take-down of a number of models proposed for re-engineering the economy.

His argument -- as they note -- behind the pundirty is basically head in the sand: don't know, don't do; until we know how to proceed, we shouldn't change anything. As I noted at the time, that is not how the most effective bureaucracy we have (the military) works.

As one general was quoted as saying about climate change: if we waited for total certainty before we acted, we'd be dead. There is never "enough" information.

One of the odd things is that what Sheeran and Lubber point out is standard market lore -- that given distortion free signals, markets adapt, and so do the consumers that drive them. That Samuelson would not agree with that is astounding to me.

This piece is simple and to the point, and the core concept of it is indeed the core of our problem: carbon (and other ecosystem resources and services) have been priced at zero, and that distorts the market that so the cost of doing nothing about CO2 emissions is too cheap (in market terms) while fixing the problem is by definition more expensive.

As a rule, I always check my spreadsheets for common sense before I rely on them to make important decisions becauuse the assumptions you make, and the formulae that calculate the results often contain hidden errors. (Oddly, that is the structure of Samuleson's piece: don't trust models.) I'm sorry, but common sense -- and my own 35 years working outdoors -- tell me we need to do something, and forward looking economists have known what it is for a long time: knock down the economic transaction box that creates externalities by excluding some classes of sources and sinks (ecosystemic, mostly) and separates micro from macro-economics (and both from the still more inclusive ecological economics.

We need to, as Sheeran and Lubber say in The Cost of Climate Inaction, start down a greener road, and the first step is setting a price on carbon. Once the market swallows that we need to move on to others kinds of emissions, like nitrogen, and then further still to price all ecosystem services. Only then will we have the Great Economy of Berry, that truly reflects the cost of our lifestyle.

April 11, 2009

I spent the past couple of days in DC, covering the Carbon Tradex Meeting. It was so jam packed with good sessions that all I had time to do was take notes. So over the next week or two I'll be posting from those notes. But a few things that I notice overall bear citing here.

There was a lot of brainpower running around the place as this is a new commodity field that is estimated to be worth somewhere in the trillions. At least a lot of them care about the environment more than other "master of the universe" types. But I was surprised to find almost as much institutional blindness in this group as there is in any other (a lot of re-inventing the wheel because they don't know the history of similar, or analogical fields -- see my session notes about the broadcast spectrum and the organic bill). What it shows is that there is a difference between knowledge and creativity, and long training seems to select for the first (in much the same that science education selects for reductionism).

There did seem to be some meta thinkers there, but I have a feeling that is more about age and broad experience (and at least an open mind) than it is specifically what I am talking about above. Branko Terzic (on the plenary panel) is one of those. That man seems to know something bigger than the facts, and the policy. Another person who seemed that way to me was Debbie Reed, on the farm offset panel, and former governor Bruce Babbit in the third plenary.

The group definitely bifurcates once or twice. There are what I would call infrastructure investment people, and there are offset people; among the offset people there are "hard" offset people and "soft" offset people. Among the infrastructure investment people, I would guess the distinction would be between "new, greener capacity creation" people and "efficiency upgrade and retrofitting" people. Again I am reminded of how the organic people jockeyed and took pot-shots at one another during the crafting of the National Organic Program, without a meta-view of how their actions were mutally dependent and synergistic. One person who seemed to understand this was Frank Tugwell, head of Winrock, who was discreet and demure in his criticism of others.

It seemed that most everybody at Carbon Tradex was okay with the Waxman-Markey draft introduced last week. I would guess that is because they think (rightly) that this is the most progressive take on their pet projects / professions and so they can work with that "clay" the best to mold what they want in a bill. Even the keynote by CEQ chair Sutley was positive on the W-M bill draft.

Another take-home is that even with the diversity of approaches suppored the different groups, any legislation in the US is likely to have an offset component because of cultural and political realities. That is 1) we have a lot of land, and a large portion of offset schemes are land based; and 2) any climate legislation that is going to make it through Congress is going to have to have the support of farm state legislators (especially Senators) and that means benefits for farmers, which means recognition of soil carbon sequestration (SCS). The urban high tech infrastructure types (above) think this is a little flaky, but guess what: they will be forced into supporting it out of necessity.

The sacrificial lamb (currently in W-M) may be international offsets (largely for tropical reforestation and avoided deforestation -- both of which are critical) because they have no real powerful domestic constituency. And the infrastructure types believe that any money for third world energy conservation programs is a diversion because we use the most energy and so we are the low hanging fruit...not a wacked argument, but if they also opposethird world forestry offset they fail to appreciate the contribution of biological sinks, especially in terms of what I like to call "historical carbon." We may end up with a lot of the same kind of craziness that is in the current farm subsidies, but we do need to move from production subsidy to husbandry subsidy if we are not going to value ag and ag land formally within our overt economic system, and this may be the only politically feasible way. The recognition of this is what attracted me to the arguments of Debbie Reed.

Most speakers seemed to think that it was important to "put a stake in the ground" as, it appears, they think the Europeans have done...even though they recognize that the Euros got it wrong. There is a lot of sympathy for the Euros for "going for it" even though there is some remorse for the way that the Euro-Carbon market tanked briefly, because that gives ammo to the nay sayers here [link to the post about the Boehner "cap and tax" bogosity]. The stake in the ground is "monetizing carbon," which will be the first step in commodifying environmental services to convert them from externalities to tradable goods. I consider there to be an ethical cost to this reification, but the trade off would seem to be worth it for the social benefits it brings in a society already so idolatrous that this is really a small incremental change.

Two or three different panelists (on different panels) mentioned that (big) business is getting behind the idea of climate change legislation (especially monetizing carbon) and there is also pressure to resolve from the technology suppliers like Siemens who want to sell the technology of carbon capture and storage (CCS) and renewables to those large businesses and utilities. Their interest in removing the roadblocks to sector growth is fairly obvious.

What the business community wants (variably according their own capital investment horizon or the capital investment horizon of their customers and clients) is "long term price signals" that allow them to do the planning they need to in order to manage their businesses prudently. From what I heard (mostly from private sector consultants) most large businesses are already figuring carbon costs into their planning, but they are anxious about pricing, which greatly affects the output of their models, and thus the quality of their decision making process. So both quantitification and universality (the business meme for "level playing field") are important dimensions for them.

But there is a core disagreement is between people who think that regulation and taxes are the way to go, and those who think that commodifying carbon and market mechanisms are the way to go (this split crosses party and ideo-political lines). Both have valid arguments (which is probably why in a nascent market such as this -- again I think of organic -- people are conflicted) in that there is no question that too specific regulations -- including, as pointed out by some, regulations already on the books -- constrain innovation, but the action of markets is slow and indirect and our problems are quickly approaching the point where we need fast and comprehensive solutions.

April 02, 2009

Or is it just the recession? An article in the business section of the NY Times this morning notes that there are the first glimmers of evidence that the carbon trading scheme in the EEC is starting to help reduce emissions, even if that improvement is being masked by even larger decreases in emissions caused by the shrinking industrial economy.

As the US Congress starts to consider a number of different cap and trade or carbon tax alternatives (even the House Agriculture Committee is getting into the game) a lot of human hot air (itself laden with CO2) has been unleashed criticizing the Europeans for not properly setting prices, and for giving away too many allowances, etc., etc. But at least they did something, which is more than we here in the US can say about the last eight years.

Mistakes will be made, and then so will adjustments. Personally, I'm confident that markets will eventually stabilize and have the intended effect. Some, Like Emmanuel Fages, who is quoted in the article, and will be at next week's Carbon Tradex America to discuss the European experience, and the plans for Phase 3 of the European Union Emissions Trading System (EU ETS) believe the market already is working. He pegs the decline in emissions -- because of carbon trading, apart from the recession -- at 4.3%. I'll take that, for starters.

A first survery of employment in the Climate Change field, and salary levels worldwide is underway by the British firm Acre Resources, consultancy Acona CMG and Thompson Reuters. According to their website:

The Climate Change sector is now an established and recognised element of business around the world, bringing within it new organisations, new jobs and an emerging group of specialist professionals.

As the sector evolves, it is becoming increasingly important for organisations and professionals to understand where they sit within a sector in the early stages of growth.

The Carbon Salary Survey 2009 is a global survey and aims to provide insight into the people working in the Climate Change sector, from the types of organisations they are working for to their job function, salaries and backgrounds.

April 01, 2009

The US House Energy and Commerce Committee released a new bill for discussion today called the American Clean Energy and Security Act of 2009 (ACES). Current plans are told preliminary hearings the third week in April, with subcommittee markup the following week and full committee markup in May.

March 30, 2009

There is an odd irony in the fact that most of the impetus for climate change legislation is coming from office bound urban elites while those who have the most experience of its effects are in rural areas and work outdoors. Who is that? Farmers for one; I was a farmer for 25 years, and I worked outdoors year round in the mountains of southern Vermont. To me climate change is a reality.

And I'm not the only one. A Bloomberg report this past Thursday focused on Nebraska farmer Rex Woolen, who has no doubts about it, and who sold an estimated 470 tons of carbon credits (most farm credits are "aggregated," or packaged together to make units large enough for markets). For example the North Dakota Farmers Union packaged the carbon credits of 3,900 of its members and got about $9 million in payments to be split among them.

There is a great quote attributed to Woollen about his fellow farmers' first take on the idea: "They called me a tree hugger. Then I showed them my first check."

Oh, how well I know this feeling! When I left farming I went to work for the Rodale Institute, where I help develop a farm economic modeling package that used USDA economic data to compare the returns of conventional and organic farming. The whole of the project was to get cash numbers in the hands of farmers who were considering a transtion. Otherwise, they would have a hard time convincing lenders and land owners to back the shift.

This is not unlike the shift to ethanol (don't get me started!) and the ethanol point is made, predictably, in this Bloomberg piece by Farm Bureau president Bob Stallman. But the fact is that we need to find other ways to compensate farmers than have been tried in the past, and all the evidence points to a conclusion that agriculture can have a positive or a negative effect on carbon emissions.

The two hangups? Quantifying the carbon balance for different practices, and determining a price that is profitable for the farmer. Fortunately it looks like the House Agriculture Committee is thinking seriously about this (finally) both in terms of funding the necessary research (a bunch is already under way, but we need more) and soliciting broad opinion about market positioning.

And there is the political reality consider. If you want farm state legislators to support climate change laws, then you need to not only make a case for why it should be done, but how it will benefit their consituents is a dollars and sense fashion. I'm all for it.

March 25, 2009

A BBC report yesterday noted that a controversial German-Indian experiment in the Southern hemisphere ocean found that a scaled up algae seeding project on 330 sq km did not lead to the increased carbon sequestration that the researchers had expected from earlier, smaller experiments.

The idea was relatively straightforward, though the implications of full scale deployment of the strategy alarmed some critics. Here is how it was to work: seeding iron filings into the ocean would stimulate phytoplankton (algae), which would extract CO2 from the atmosphere, then die and settle to the ocean bottom, where that carbon would become tied up in sediments and remain sequestered for long periods, reducing the concentration of CO2 in the atmosphere.

Based on those earlier experiments, at least one commerical company is planning much larger -- up to 40,000 sq km -- experiments using funds from the global carbon offsets market. As one critic cited in the BBC article (from Greenpeace) noted: "if we're going to be pursing this as a climate mitigation strategy, then we're looking at a state of the world where we rely on manipulating the ocean on a truly huge scale." Manipulation is about dumping and treating, whereas finessing is about fine tuning existing systems for optimality. These are, at the heart, two very different approaches.

Now, recognition of the need to actually remove historical CO2 from the atmosphere was one of the reasons that prompted me to start this blog, and doing so via plants seems to me the best, most natural way to do so. But this "seeding" strikes me as too much of a silver (iron?) bullet approach. It doesn't really recognize the complexity of interaction in natural systems, and long term, recognition, acceptance and finessing of those systems (to which we belong) is the only answer that is going to stick -- and it is going to involve lifestyle and consumption changes, too --- du-uh!

What really gets me about this kind of idea is the silver bullet mentality, the Oh-Mi-God, just buy the right lottery tickey, Hail Mary approach.

So what actually happened? They spread six tons of iron filings. There was a burst of algal growth. The algae were eaten by copepods (I'll spare you the recitation of the food chain but it is -- not surprisingly -- as complex and interesting as that in the soil), which were eaten by amphipods, etc, etc, and so the desired "desposition" didn't happen.

Oh, well.

BTW, there are a lot of "whatever-e-pods" in the ocean food chain, species after species of mini-crustaceans -- some with barely a shell to deserve the term -- that are the heart of that food chain, the base of that food pyramid (of which, again, we are at the top...don't forget that) and these many diverse species have a real dependence on the pH of the ocean, which is changing as it absorbs more CO2 directly (chemically) and is becoming more acidic. I will try to come back to this post to link to some of that stuff in a day or so....

February 10, 2009

As I was posting an item to one of my other blogs this morning, I noticed in the post listing a reference to an Australian study from 2007 that is relevant here, so I thought to post a link to it. Basically it was an analysis of the extent to which "carbon rights" should be treated in the same fashion as water rights and mineral rights. I would have cross linked it at the time, but this blog didn't exist at the time...articles like this were one of the reasons for starting Sinks or Swim...

February 09, 2009

The 2007 USDA Census of Agriculture was issued last week, and a story in the Sunday New York Times business section, incoming Secretary (and former Iowa governor) Tom Vilsack noted that as American agriculture continues to diversify -- even while consolidation intensifies and the share of total farm production comes from fewer and fewer larger farms -- new income streams like energy production and carbon sequestration are going to become more important. Of course, we'd like to see that trend intensify. If we could shift some of the subsidy programs from crop production support to soil and air preservation, it could make a huge difference both in the structure of the farm economy, and in lowering atmospheric carbon. Look for more on this in the future, both here an in our other blogs about the farm and food system, Big MACC Attack and Hand to Mouth.

October 07, 2008

Buried at the bottom of a front page story in yesterday's Washington Post (see my post from yesterday) was a report of a landfill in Christiansburg VA that has sold $43,000 worth of carbon offsets on the Chicago Climate Exchange in just a few months, theoretically in exchange for capturing the methane that is created as the landfill contents decompose.

Earlier in that same article, which was about the voluntary carbon offset market generally, the reporter noted

"Some offset projects, such as mass tree plantings aimed at absorbing carbon dioxide, deliver climate benefits that are difficult to measure. In other cases, it is unclear whether offsets funnel money to existing projects or to projects that might have been done anyway."

Carbon sink projects (of which reforestation is one type) may be more difficult to measure than the amount of gas emitted by a landfill -- at least one where it has been channeled and collected (see how this is done) and shoved out of a pipe -- but there has been a lot of work on understanding these natural sink systems and methods are becoming more certain over time. What's more important though, is the scale at which these systems operate --that makes them an important part of the solution to global climate change...in fact, I would argue, the most important, because they are the only method of actually reducing the amount of greenhouse gases back to a level ( generally, 350 PPM) that is tolerable.

Remember, the only scenario under which infrastructure changes and emissions reductions can solve the climate change problem is one in which we reduce the level of annual emissions to below that of the net annual sequestration that occurs by natural processes, and the time scale of that scenario is way too long. No strategy that doesn't include optimizing natural carbon sinks -- the photosynthetic, plant based sequestration system which is at the heart of life on earth -- is going to get us to where we need to be.

Now, no journalist can be expected to know everything -- they are supposed to report and interpret the findings and opinions of people who do -- and the author of this piece, David Farenthold, seems to be a pretty sharp guy based on a review of the articles he has authored over the past few years, but I saw a subtle slash at plant sequestration in the article, while a free pass was given to the landfill project, even though it fails on two of the key criteria that determine whether a carbon offset has value: measurable reduction and additionality.

In the case of the landfill, yes the amount methan captured from the landfill is measurable, but there is no reduction in emissions going on at all if they are just flaring it off -- burning it, without even accomplishing anything in the process. Co-generation -- producing electricity from the landfill gas -- at least gets some benefit from the release, and might at least make it worthy of some sort of payment, but taking scarce carbon project funds and paying them to these people is poisoning the well of credibility, IMHO. An article from the Stafford County Sun, also in Virginia, makes this difference pretty obvious, especially considering they get their payout -- $180,000 / year -- from sales of electricity, not from selling bogus credits.

That's the other point: the Christiansburg project was already going, and the offsets that they are selling (despite not having anything to sell since they are flaring) have no additionality, that is they would be doing it anyway.

"'The money is gravy to us right now,' said Alan Cummins, executive director of the regional authority that runs the landfill. Even without it, he said, 'we would always continue to flare.'"

If the Chicago Climate Exchange allows this kind of pseudo-offset to trade in the market all they are going to do is ruin the market for credits that could be use to fund important, scale-capable projects in grassland, wetland, forestry and agriculture -- and I am not talking just no-till here -- that can really help us solve the climate change problem.

Sinks Or Swim

The reality is simple, yet serious. If we don't create and manage carbon sinks to remove already existing greenhouse gases from the atmosphere, sea levels are going to rise, wreaking havoc on coastal cities worldwide.

The main cause of the global climate change which threatens human civilization is simple: over eons, plants, fueled by the sun, moved carbon dioxide from the atmosphere to the ground, lowering the heat retention properties of the atmosphere, which created a climate suitable for the rise of human civilization.

In only a little over a hundred years, we have taken so much of that carbon out of the ground (in the form of fossil fuels) and put it back into the atmosphere that we are raising the temperature again. We have already gone beyond the point at which the stability of the climate on which we depend has been compromised. Try as we might to reign in further carbon emissions, there is only one way to actually reduce the amount of carbon dioxide in the atmosphere, and that is by getting it back underground.